European Parliament plays down crypto threat

The Committee on Economic and Monetary Affairs (ECON) of the European Parliament states that the Bitcoin experiment has not only survived but expanded beyond niche status.

The report, however, concludes that cryptocurrencies have no intrinsic value because “they are not linked to any underlying commodity or sovereign currency. Their exclusively digital form, the quite complicated and labour-intensive mechanism of their creation, and the lack of political willingness to accept them as official legal tender in any jurisdiction will limit their circulation and use and make them unlikely competitors to sovereign money.”

The report goes on to say that cryptocurrencies “respond to real market demand” and they have the potential to become a “full-fledged private money” or even a permanent element of the global economy. However, Bitcoin et al will unlikely threaten central banks and sovereign currencies and dismantle existing monetary systems.

There are countries with hyper or runaway inflation, like Venezuela, that may benefit from substituting their fiat currency with crypto. Regarding regulation, authorities should look at cryptocurrencies as “any other financial instrument,” taking into consideration potential risks, including money laundering, tax evasion and other illegal activities.